One of President Donald Trump’s signature legislative achievements was the Tax Cuts and Jobs Act passed in 2017. Trump and Republicans frequently claimed the tax overhaul provided major relief for the middle class.
Critics argue the benefits skewed heavily toward corporations and the wealthy. Examining the effects of the law provides perspective on how different groups benefited under Trump’s tax plan.
Overview of the Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act made sweeping changes to the tax code, including :
- Cutting income tax rates across all brackets, but expiring individual cuts in 2025.
- Nearly doubling the standard income tax deduction to $12,000 for individuals and $24,000 for married couples.
- Eliminating personal exemptions for dependents and capping some itemized deductions.
- Expanding child tax credits.
- Cutting the corporate tax rate from 35% down to 21%.
This complex mix resulted in fluctuating savings and costs for different income levels and households.
How the Tax Cuts Helped Corporations
Perhaps the clearest beneficiaries of the Tax Cuts and Jobs Act were corporations, which saw permanent tax relief :
- Their tax rate fell from 35% to 21%, one of the largest corporate rate cuts ever.
- Rules allowing overseas profits to be taxed at a reduced rate were also beneficial.
- The corporate cuts do not expire, cementing lower taxes on corporations indefinitely.
- Corporate tax revenues fell from around 9% of total federal revenue to just 6% after the law passed.
These permanent corporate breaks added up to hundreds of billions in tax savings.
How the Tax Cuts Helped the Wealthy
Wealthy individuals also saw sizable reductions in their personal income taxes:
- The top 1% of earners received an average tax cut of around $50,000 per year .
- Approximately 65% of the total tax savings went to those earning the top 20% of incomes .
- Reductions to estate taxes were also beneficial to wealthy households.
- But individual tax cuts phase out in 2025 while corporate cuts stay.
The skewed benefits toward the wealthy added to concerns about rising income inequality.
How the Tax Cuts Helped the Middle Class
The middle class saw more modest tax savings overall:
- Households earning between $50,000 and $75,000 saw tax savings of around $1,100 on average .
- Typical families with children saw larger benefits due to the expanded child tax credit .
- But the law also capped mortgage interest and state tax deductions relied on by some middle class itemizers.
- Since individual tax cuts expire, long-term gains for the middle class remain limited.
Savings existed, especially for families with kids, but the advantages appeared smaller and shorter-lived.
How the Tax Cuts Helped Small Businesses
Small business owners benefitted from the passthrough provisions:
- Pass through entities like partnerships and S-corps face individual not corporate rates.
- The law created a 20% income tax deduction for pass through owners.
- This allowed business owners to shield more income from taxes.
- Service businesses like accountants, consultants, and lawyers gained from these deductions.
The pass through benefits offered major relief to a sector employing around 50% of U.S. workers .
How Lower-Income Workers Benefited
Workers with lower incomes saw uneven gains:
- Typical workers at minimum wage saw limited benefit from the law.
- However, the increased standard deduction did benefit some cash-based workers and gig economy participants.
- Younger workers and students lost the personal exemption for dependents, raising taxes .
- The expanded earned income tax credit and child credit aided low-income parents.
So advantages for lower earners depended heavily on household status and deductions utilized.
The Tax Cuts and Jobs Act cut taxes across the board as promised. However, an analysis of the effects shows a tilted distribution toward richer households and permanent gains for corporations versus temporary savings for the middle class.
While almost all groups saw some benefits, the degree of relief correlated with income level, with those at the top experiencing the largest advantages. So evaluations of who the tax plan truly helped must weigh absolute dollar savings against the share of total tax relief. By the latter measure, the disproportionate gains for corporations and top earners stand out when assessing outcomes.
Hi y’all, I’m Caroline Webster, your proud Texan source for everything related to our 45th president, Donald Trump, and the GOP.
Along with my husband, Bill, I run Trump Scoop, born out of our ranch in the Lone Star State, offering insightful and unbiased commentary on conservative politics.
With a degree in Political Science and years immersed in local politics, my aim is to keep our readers informed and connected.
For me, it’s not just about delivering news—it’s about standing up for our values and the spirit of American patriotism.